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An Advertising Supplement to the Orange County Business Journal • July 13, 2009

Sponsored by:

FFrraannkk UUbbeellllFrank Ubell heads the Intellectual Property &

Technology Group at the Orange County,California, office of Greenberg Traurig, LLP. Hehas over twenty-five years of experience litigatingpatent and trademark infringement cases and othercauses. He can be contacted at [email protected].

orporate officers and directors face potential personal liability for patentinfringement damages in cases where they “actively induce” the corpora-tionʼs infringement. The corporation itself faces the prospect of increaseddamage awards if the corporation is guilty of “willful” patent infringement.

Relatively recent case law has made it more difficult to hold a corporateofficer or director personally liable for patent infringement damages, and

has also made it more difficult to prove willful infringement in some cases.Officer and director liability

With respect to establishing officer liability for inducing the corporation to infringe,recent case law from the U.S. Court of Appeals for the Federal Circuit has estab-lished a more stringent test than that previously applied by some courts. In particu-lar, it must now be shown that the corporate officer had a “specific intent to encour-age the infringement.” Consistent with this test, a jury in one case was instructed thatthere must be “… proof that the defendant knowingly induced infringement with theintent to encourage the infringement. The defendant must have intended to causethe acts that constitute the direct infringement and must have known or should haveknown that its action would cause the direct infringement.”

Under this standard, good faith reliance on an opinion of counsel that the patent inquestion is invalid or not infringed can defeat an assertion that a corporate officerintended to cause infringement. On the other hand, the failure to procure an opinionof counsel can be asserted as circumstantial evidence of intent to infringe, as theFederal Circuit held recently in the Broadcom v. Qualcomm litigation.

CRReedduucciinngg OOffffiicceerr,, DDiirreeccttoorr,, aanndd CCoommppaannyy EExxppoossuurree

ttoo PPaatteenntt IInnffrriinnggeemmeenntt DDaammaaggee AAwwaarrddssby Tim Hsieh and Frank Ubell, Greenberg Traurig LLP

Willful infringementWith respect to the issue of willful infringement and increased damages, up until 2007,

the courts imposed a “duty of care” on a potential infringer to avoid infringement. Accordingto that “duty of care” standard, where a potential infringer had actual notice of anotherʼspatent rights, it had an affirmative duty to exercise due care to determine whether or not itwas infringing. Such an affirmative duty included, inter alia, the duty to seek and obtaincompetent legal advice from counsel before the initiation of any possible infringing activi-ty.

In its 2007 decision in In re Seagate, the Federal Circuit abolished the “duty of care” testand established a new two-part test. Under this test, to prove willfulness, a patent holdermust first show by clear and convincing evidence that: (1) the infringer acted despite anobjectively high likelihood that its actions constituted infringement of a valid patent and (2)that this high likelihood of infringement was either known, or so obvious that it should havebeen known, to the accused infringer. The Seagate Court emphasized that, under its newtest, there is no affirmative duty to obtain an opinion of counsel regarding patent validity orinfringement.

Since Seagate, courts have continued to employ a “totality of the circumstances test” forevaluating whether patent infringement was willful. Factors relevant under that test contin-ue to include: (a) whether the infringer promptly sought and obtained competent legaladvice; and (b) whether there was an independent invention or attempts to “design around”the patent, as opposed to copying.

continued on page A-14

TTiimm HHssiieehhTim Hsieh is an associate in the IntellectualProperty & Technology Group at the Orange

County, California office of Greenberg Traurig,LLP. He can be contacted at

[email protected].

Intellectual-Guide:SupplementS.q 7/10/09 11:24 AM 1

Page A-12 Get local breaking news: www.ocbj.com ORANGE COUNTY BUSINESS JOURNAL / ADVERTISING SUPPLEMENT July 13, 2009

IINNTTEELLLLEECCTTUUAALL PPRROOPPEERRTTYY

tʼs one of your fears as corporate counsel – waking to find your Blackberry crammedwith emails from attorneys around the country, all offering their services and possiblytheir condolences. Your company has just been sued for patent infringement in a smalltown in Eastern Texas, where juries have traditionally awarded huge verdicts for patentowners – including a recent $1.67 billion verdict for Johnson & Johnson. What do youdo?

Assuming that venue is proper and that the patent holder wonʼt accept a quick, cheap set-tlement, most accused infringers embark on a long and often costly journey to defend againstthe patent in court. But there is another option that all accused infringers should consider –requesting a patent reexamination before the Patent and Trademark Office.

Reexamination is a process in which anyone can attempt to challenge the validity of thepatent. Reexamination can be ex parte, with a third-party requestor who cannot participatein the proceedings after the initial request, or inter partes, in which the requestor remainsinvolved throughout. The PTO will order a reexam if there is “a substantial new question ofpatentability” based on prior patents and/or printed publications.Stay of litigation while reexamination is pending

Many district courts will stay patent litigation while a reexamination is pending before thePTO. A stay can prevent the duplication of effort by the district court judge and the PTOexaminers, who may be better equipped at making validity determinations than generalistjudges. Furthermore, a stay is ideal for the accused infringer, allowing it to go on the offen-sive and attack the patent in a relatively streamlined and less expensive process.Lower standard to invalidate patent during reexamination

Patents issued by the PTO are entitled to a presumption of validity, which raises the bar forinvalidating a patent in litigation. However, the PTO examiners are not bound by that samepresumption of validity when considering a reexam. As a result, it may be easier to invalidate

IRReeeexxaammiinnaattiioonn aass aa VVaalluuaabbllee TTooooll

iinn PPaatteenntt LLiittiiggaattiioonnby Brian G. Arnold, Partner, Thomas Whitelaw & Tyler LLP


f you think that “Intellectual Property” or “IP” is something that only large corporationsneed to worry about, think again. The truth is that every company owns some form of IP,and in this competitive marketplace itʼs something that every businessowner needs to think about. By knowing and protecting your rights,you can enhance the value of your company and avoid lawsuits.

What is IP?Intellectual Property is any non-physical asset of your company. It

includes trademarks, copyrights, trade secrets, and patents (i.e., inven-tions).

• Trademarks are “designations of origin” and include your company name, or any logos thatyou use in your business, etc. Consumers use these to distinguish one company from another.

• Copyrights are the rights in and to artistic works and writings. Although people tend to thinkof sculptures and novels when they think of copyrights, it also includes the drawing incorporat-ed into your companyʼs logo, website, even contracts, rules and regulations, blueprints, etc.Your company has likely spent thousands of dollars developing these works, and the result isrights that are just as protectable as the latest bestseller.

• Trade Secrets consist of the confidential information that gives your company a competitiveedge, including vendor or supplier lists, price lists, general know-how, and other proprietary

IYYoouu MMaayy HHaavvee HHiiddddeenn AAsssseettss TThhaatt NNeeeedd PPrrootteeccttiioonn

by Brian P. Kinder, Esq., Hart, King & Coldren

information accumulated and kept secret (hence the name) over the years. One way to deter-mine whether you own a trade secret is to ask yourself whether you know and use confiden-

tial information that you wouldnʼt want the general public or a competi-tor to know. Many companies donʼt realize they own a trade secret untilit is too late and the information falls into the wrong hands.Why should you protect intellectual property?

There are two reasons for protecting your IP assets – defense andoffense. Defense is important because it helps prevent you frominfringing on the rights of others and insulates you from liability when

and if your rights are ever challenged by a third party. Offense is important in that it allows youto differentiate your company from the competition and strengthens your position if you everneed to pursue a third party for violating your IP rights.How can you protect intellectual property?

An ounce of prevention is worth a pound of litigation. By proactively protecting your compa-nyʼs intellectual assets, you can better insulate your company from litigation and position yourcompany for future growth.Six tips to keep your intellectual property protected

1. Conduct an internal audit to identify all IP assets that your company actually owns;2. Register any trademarks that are currently not registered;3. Identify any copyrighted works that you own and seek assignments for any works that

were created by third parties (e.g. logos, websites, etc);4. Confirm that your company is identified as owner for all registered domain names (e.g. not

an employee or web-design company);5. Consider registering the copyright for all key works that might be valuable to an “oppor-

tunistic” third party;6. Establish a written trade secret protocol that states who has access to confidential infor-

mation and implements security measures to ensure that confidentiality is maintained.

BBrriiaann GG.. AArrnnoollddBrian G. Arnold specializes in patent litigation at leading

boutique firm Thomas Whitelaw & Tyler LLP in Irvine, wherehe creatively and efficiently resolves patent-related disputes.Mr. Arnold represents Fortune 500 and middle-market com-panies around the country that face complex, high-stakespatent litigation issues. He can be contacted at 949.812.4744or [email protected].

BBrriiaann PP.. KKiinnddeerrBrian P. Kinder is an Associate with Hart, King & Coldren. His

practice includes litigation and transactional work in the areas ofintellectual property. He may be reached at 714-432-8700 x. 336 orvia email at [email protected].

Intellectual-Guide:SupplementS.q 7/10/09 11:24 AM Page 12

July 13, 2009 ORANGE COUNTY BUSINESS JOURNAL / ADVERTISING SUPPLEMENT Get local breaking news: www.ocbj.com Page A-13




In view of the above, any corporate officer who has knowledge of potentially infringingconduct will want to strongly consider pursuing “design around” strategies, and will likelywant to obtain outside counsel opinions in order to insulate that officer from personal lia-bility, as well as shield the company and the officer from willful infringement charges. Inprocuring opinions of counsel and pursuing design arounds, there are a number of pointswhich should be kept in mind.Implementing design around strategies

Based on recent case law, designing around potentially infringing patent claims remainsan important technique to avoid infringement and willfulness findings and to negate a find-ing of specific intent to infringe. Corporate officers working with technical staff and outsidecounsel can develop such strategies. One strategy is to study a patent of interest anddetermine a claim limitation which can be omitted from the potentially infringing productand to then obtain an opinion of counsel that the product with the omitted the limitation willindeed not infringe. For more on design arounds, see “Are You Trying to Design AroundMy Clientʼs Patent?” by Franklin Ubell, INTELLECTUAL PROPERTY TODAY 16-18(September 2006).

Of course, companies would oftentimes like to avoid the expense of obtaining an outsidecounsel opinion. Some recent cases suggest that, under some circumstances at least,proceeding without a formal outside counsel opinion, or relying on an in-house opinion,

REDUCING EXPOSUREcontinued from page A-11

would not be “objectively reckless.” Nevertheless, the presence of such an opinion will stillbe substantial evidence weighing against a finding of willfulness, as well as personal offi-cer liability, and would appear mandatory to procure in many instances.Proper procurement and use of invalidity/non-infringement opinions

Under the case law, obtaining an invalidity or non-infringement opinion from outsidecounsel is only a first step. The opinion needs to be timely procured, provided to companydecision makers at the appropriate time, and relied on by them in deciding to proceed withproducing the product or other activity in question. Ideally, procedures and lines of com-munication should be put in place to facilitate this series of actions.

The need for such procedures is emphasized by cases such as Chiron Corp. v.Genentech, Inc., where the Court observed that since the decision makers at Genentechwere not apprised of their in-house counselʼs reasons for believing the patent-in-suit wasinvalid and not infringed, they could not be said to have reasonably relied on such reasons.Similarly, in Applied Medical Resources Corp. v. United States Surgical Corp., the FederalCircuit affirmed a willfulness finding despite the presence in evidence of three written opin-ions of counsel because one of the opinions was simply “shipped off in the mail”, anotherfailed to address pertinent issues, and the third arrived after the infringer began selling theinfringing product. As the Federal Circuit observed, “based on this evidence, a jury couldhave reasonably concluded that U.S. Surgical paid little if any attention to the opinion let-ters.”

Thus, opinion letters should to be supplied to decision makers at a time when productionof the potentially infringing product can still be avoided or a design around pursued, and

should be reviewed and relied upon by deci-sion makers in determining to move for-ward. It may be prudent to assure that apaper trail of communications and meetingminutes is created, evidencing compliancewith such procedures for reference in futurelitigation.Opinion letter DOs and DONʼTs

Of course, the value of outside counselopinions is seriously undermined whenimportant facts are withheld from opinioncounsel. As one Court stated, “Whenevermaterial information is intentionally with-held, or the best information is intentionallynot made available to counsel during thepreparation of the opinion, the opinion canno longer serve its prophylactic purpose ofnegating a finding of willful infringement.”Thus, steps should be taken to ensure thatall relevant information is provided to opin-ion counsel.

Once an opinion of counsel is received, aquality review of the opinion may be inorder. For example, in one case, Eli Lilly andCo. v. Zenith Goldline Pharmaceuticals, theCourt found willful infringement where “theopinion letter contained glaring errors andomissions that both the authors and therecipients should have recognized.” Inanother case, the court found that the opin-ionʼs recipient, an experienced patent attor-ney, should have recognized the obviousshortcomings of outside counselʼs opinion.

In addition, care should be taken to pro-tect the independence of outside counselʼsjudgment and opinion preparation. In onecase, the court considered the fact thatinfringerʼs in-house patent lawyer reviewedand revised a draft opinion from outsidecounsel in determining that infringementwas willful.Conclusion

After Seagate, some believed that theneed for outside counsel opinions regardingpatent validity and infringement had less-ened. However, the companion develop-ments in cases regarding officer liability indi-cate that design arounds and opinions ofcounsel will still be essential in manyinstances in order to defend against claimsof officer, director and company liability.

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hether you are a well established business looking to control your costs in leaneconomic times or a new venture facing difficult decisions on allocating preciousstartup resources, here are some practical tips for a cost effective trademark strat-egy.

Audit. Like any proactive business agenda, a well-planned road map is the keyto a successful trademark strategy. A preliminary step should be to retain competent legal coun-sel to conduct a comprehensive trademark audit. This exercise should result in the identificationof current and future trademarks worthy of protection as well as the marketand geographic reach where protection is warranted.

Prioritize. It is unreasonable to attempt to execute your entire trademarkplan overnight. Thus, prioritization of your trademark needs often provevital. In certain situations, you may rely on common law rights to protectyour trademark, while in others, registration may be critical. Good trade-mark counsel can advise you on important deadlines and consequences ofany delays in seeking certain protections.

Clearance. Before embarking on a new product release or marketingcampaign, consult a trademark attorney to research whether you are clearto use the proposed trademarks without infringing on others ̓rights. Onceyou have clearance to use the mark, carefully consider the form in which toseek registration.

Registration. In most cases, it is advisable to prioritize registration for the word mark over styl-ized or design marks. While the design elements of logos tend to evolve and change over time,the words typically remain the same. Also, consider building a family of marks as Apple has donewith the iBook, iPhone and iTunes for in the world of trademarks, one plus one equals three.Federal registration can also enhance your trademark rights including the option to seek statuto-ry damages against counterfeiters. While you may only use the ® upon issuance of a registration,the TM symbol can be used anytime to put others on notice of your common law rights.

Foreign Considerations. When considering where to seek protection internationally, considerthose countries where you are most likely to have sales followed by those places where infringe-ment is most likely to occur.

Insurance. Obtaining business insurance that includes advertising injury provisions is usuallymoney well spent. For a relatively minimal premium, such policies may provide crucial coverageto costly litigation involving allegations that you infringed on others ̓trademarks.

At the end of the day, having your ducks in a row can dramatically save both time and money.An effective trademark strategy can both enhance and protect one of your most valuable assets,your brand.About the author

Eric Goodman is a partner at Burkhalter Kessler Goodman & George LLP in Irvine and headsthe Intellectual Property group. His legal expertise includes trademarks and copyrights and brandprotection. He can be reached at (949) 975-7500 and [email protected]

WPPrraaccttiiccaall TTiippss ffoorr aa CCoosstt--EEffffeeccttiivvee

TTrraaddeemmaarrkk SSttrraatteeggyyby Eric Goodman, Burkhalter Kessler Goodman & George LLP

ust as in an athletic competition, the choice of venue can be a critical factor in the out-come of patent litigation. Recent court decisions concerning jurisdiction and venue inpatent cases will have a profound influence on where they can be litigated. By know-ing these rules and how they are applied in patent cases, you can seize the home-court advantage.

As a patent plaintiff, you want to have the option to litigate in the court of yourchoice. Choosing the court often allows you to save costs and exercise greater control over thelitigation. If you plan to file in your own district (your “home court”), controlling venue is fairlystraightforward. As a general rule, if youʼre the first to file and the court has personal jurisdictionover the defendant, you can usually prevent the defendant from transferring the case else-where. Pitfalls for patent holders

However, one of the pitfalls for patent holders in the current legal landscape is the declarato-ry judgment action. Indeed, even such seemingly benign communications from the patent hold-er as an offer to license the patent to a target can create an opportunity to file a declaratory judg-ment action challenging the patent. A target defendant can file this action in the court of its ownchoosing before the patent holder files suit for infringement, thus denying the patent holder its“first to file” status. For the unwary patent holder, this could mean ceding home-court advantageto the other side. The court chosen by the target must still have jurisdiction over the patent hold-er and recent cases suggest that merely sending a cease and desist letter into a particular dis-trict where the target is located will not alone create personal jurisdiction. However, additionalenforcement efforts or business activities in the district by the patent holder may give rise to per-sonal jurisdiction. Because these issues can be difficult and expensive to resolve, a better strat-egy is to avoid such situations where possible. One approach for the patent holder is to file acomplaint in your home district but not immediately serve the complaint. During the 120-dayperiod between filing and the deadline for service, the patent holder can engage in negotiationswithout fear of losing its “first to file” status.

Recent patent cases have also addressed the situation where a patent holder brings suit in adistrict to which neither party has significant ties. Based on these recent trends, it appears thatthe courts are more willing to transfer cases when the parties, witnesses, and evidence aremore centrally located elsewhere. While some room for strategically selecting venue remains,patent holders need to be aware of the possibility that their case will be transferred when theyselect a particular court that is not their own home court.

Jurisdiction and venue can have a significant effect on the ultimate outcome of patent litiga-tion. While recent case law has significantly changed the rules, the opportunity to capture thehome-court advantage is still available for the careful and knowledgeable litigant.

For more information about Knobbe, Martens, Olson & Bear, LLP please visit knobbe.com.

JGGaaiinniinngg HHoommee--CCoouurrtt AAddvvaannttaaggee iinn PPaatteenntt LLiittiiggaattiioonn::

RReecceenntt ttrreennddss iinn jjuurriissddiiccttiioonn aanndd vveennuueeby Fred Berretta and Peter Clevenger, Knobbe, Martens, Olson & Bear, LLP


Eric Goodman



n 1980, Chief Justice Warren E. Burger opined in Diamond v. Chakrabarty that Congresshad intended patentable subject matter to include “anything under the sun that is made byman,” with the exception of the laws of nature, natural phenomena and abstract ideas.However, what constitutes an abstract idea has been a source of much debate. If a methodphysically transforms an article, for example, a process that melts rubber, it is no longer anabstract idea and is patentable. However, the recent In re Bilski decision has reversed pre-

vious precedent and found that business method patents are not eligible for patent protection and arecent Supreme Court decision relating to the Bilski case has made the landscape for businessmethod patents unclear.Patent Protection for business methods

The United States Patent and Trademark Office at its inception and for a period of fifty years there-after granted business method patent protection. The earliest business method patent was grantedin 1799 for a financial patent for “Detecting Counterfeit Notes.” Forty-one financial patents in the artof bank notes, bills of credit, bills of exchange, check blanks, detecting and preventing counterfeit-ing, coin counting, interest calculation tables and lotteries were also granted.

However, soon after these patents were issued, early case law emerged that eroded patent pro-tection for business methods. Hotel Security Checking Co. v. Lorraine Co., held that a bookkeepingsystem to prevent embezzlement by waiters was unpatentable. Similarly, in Joseph E. Seagram &Sons v. Marzell, the court held that a patent on “blind testing” whiskey blends for consumer prefer-ences was also unpatentable.

With advancement in computer related methodologies, the U.S. Patent Office deviated from itsposition of delineation between technological and business inventions and took the position thatpatents having computer implemented methods for businesses were acceptable. The Patent Actprovides that a patent may be granted for any new and useful article of manufacture, machines, com-position of matter or process. The meaning of a “process,” however, has been a source of muchuncertainty with respect to business method patents.

Even International Patent Offices canʼt agree whether business method patents should be grant-ed. Countries such as Australia, Japan and Singapore have historically regarded business methods

ICCaann II GGeett aa BBuussiinneessss MMeetthhoodd PPaatteenntt??

by Hani Z. Sayed and Erin Zaskoda, Rutan & Tucker LLP

as patentable. Protection in Canada, Korea and Taiwan is less certain and countries such as Israel,China, India, Mexico and most of Europe have been less willing to grant patent protection for busi-ness methods.State Street Bank v. Signature Financial Group

Finally, in 1998, the court ruled in State Street Bank v. Signature Financial Group that a financialgroup could patent a process for managing a portfolio of mutual funds. This case affirmed the U.S.Patent Officeʼs position that methods of doing business were indeed patentable.

The State Street Bank decision opened the door for the U.S. Patent Office to issue patents onmethods of doing business which were previously excluded as abstract ideas. Since 1998, whenbusiness method patents became available, many of these patents issued and have become thesubject of costly patent litigation. Banks, insurance companies, accounting firms, securities and manyother businesses that had never been confronted with potential patent litigation were now at anincreased risk of being sued or enjoined for simply conducting everyday business. Moreover, withcomputerization taking hold in the financial sector, many of these business method patents relatedto automating previously manual procedures, further complicated the dangers to many financialindustries.

The U.S. Patent Office was heavily criticized for issuing business method patents that were con-sidered vague, broad and a simple automation of known practices. The impact of these changes wasfurther exacerbated by the fact that the U.S. Patent Office didnʼt have adequate databases to searchfor business method applications, nor did they have patent examiners that had sufficient backgroundin the business sector. As a result of these problems, the Patent Office attempted to develop morestringent and intensive reviews of business method patent applications.

The tides of change began with the case of eBay Inc. v. MercExchange, L.L.C., when the SupremeCourt commented that some business method patents had “potential vagueness and suspect valid-ity.”

The case In re Bernard L. Bilski involved a patent application for a method for managing the con-sumption risk costs of a commodity sold by a commodity provider. In that case, the U.S. Patent Office


HHaannii ZZ.. SSaayyeeddHani Z. Sayed is a partner in the Intellectual Property

section of law firm Rutan & Tucker, LLP. His practiceemphasizes intellectual property prosecution andlitigation with particular emphasis on patent, trademarkand copyright prosecution. Contact him at714.641.3492 or [email protected]

EErriinn ZZaasskkooddaaErin Zaskoda is a recent admittee to the CaliforniaState Bar and works in the Intellectual Propertysection of law firm Rutan & Tucker, LLP. Contact

her at 714.641.3463 or [email protected]





atent Prosecution is an art. A well executed patent strategy can build portfolios ofgreat value. A haphazard strategy (or lack of strategy) is as likely to hit the jackpotas a lottery ticket. Technology businesses must give the atten-tion and respect to their intellectual property which is com-mensurate with its value.

Do not be fooled by rumors that angels will sing, conflict willend and nirvana will be achieved through expedited patent examination atthe United States Patent and Trademark Office (USPTO).

The USPTO remains an arcane system which has for decades rewarded form over substanceand this latest reinvention is no more than double speak which will lead the unwary into theabyss. If properly funded and staffed, the USPTO has the potential to help bring the U.S. outof the economic downturn by providing prompt validation of innovation, which in turn facilitatesbusiness and investment.

However, our present USPTO remains a collection of underpaid and overworked patentExaminers who have a bag of tools which are regularly deployed to obstruct the very innova-tion that patents should reward.

P““ IInn tthhee TTrreenncchheess”” RReeaall IIPP SSttrraatteeggyy

Real Fast Track Patentsby Mark H. Krietzman, Partner and Co-Chair, Technology Law Group, Luce, Forward, Hamilton & Scripps LLP

Expedited examinationThe hyped expedited examination, which is

supposed to guarantee an office action (areview) within one year (as opposed to 28-45months in many cases), is a distraction bywhich the USPTO offers up an alternative toits normal glacially slow process – for a fee.

The so-called expedited patent process isan ill-conceived band-aid that supposedlyaddresses complaints about an impotentpatent office infrastructure which results in toolittle too late.

The expedited examination simply burdenshifts the process from Examiners who shouldbe doing their job of locating the best prior artand working through proper claims, to thepatent attorney and the applicant.

The expedited process requires the patent-ee (or counsel) to make representations to theUSPTO which are more likely than not goingto devalue any patents obtained. Additionally,such representations may further expose theapplicant and prosecuting attorney to chargesof inequitable conduct.Think global

The above reality begs the question, “Howone can get a fast patent examination of animportant technological innovation withoutopening the patent, counsel and applicant upto unfair and unreasonable risks?” Answer:Think global!

We have pioneered a practice of actual fasttracking patent examination through whatsome may see as an “old-school” strategy.Whenever seeking foreign IP rights (outsidethe U.S.), the jurisdictions entered have theirown institutional biases and assumptions.Through long-term relationships with respect-ed, trusted and battle-tested colleagues (andnot the latest blogger el cheapo foreign agentwho is spamming all U.S. patent attorneys forbusiness), we have been effective in develop-ing a practice of real fast tracking. We ana-lyze which foreign patent offices are best suit-ed for what technology and whether the for-eign patent office is aligned with the USPTOin a substantive fashion which allows theunderpaid, over-worked, U.S. patentExaminer to leverage the work done by theforeign office. Advantages

This strategy, while not inexpensive, is less

costly and less risky than the expedited U.S. examination and, for this practitioner, has yieldedsubstantive and well thought-out examinations in much less than 12 months. The process has

been fine tuned by the recent codification of a patent superhighwaybetween the U.S. and some foreign patent offices. The superhighwayallows the USPTO to rely on the foreign examination in making its deter-minations, thus buttressing the sound logic behind this practice.

This process, if properly executed, provides the purported benefits of aU.S. expedited examination with almost none of the shortcomings. It provides a substantiveexamination within 12 months, without making the patent applicant and counsel responsible forsearching prior art and creating the potential liability of providing the Examiner with the analy-sis of such prior art, should such analysis be successfully “spun” as being misleading or sub-jective.

If obtaining an examination and/or a patent within a reasonable period of time is an importantpart of your business model, exit strategy, or fund raising plans, then taking a trip down the glob-al patent superhighway is an option to consider. This highway is like a racetrack and the bestdrivers with the best pit crews are more likely to obtain the win – for you.

MMaarrkk KKrriieettzzmmaannMark Krietzman is

a Partner at LuceForward and co-chairs the firm’sTechnology LawGroup. He is a regis-tered patent attorneywith more than 21years of experiencefocusing on intellectual property issuesand technology law. He can be reached [email protected].

The hiring of a lawyer is an important decision and should not be based solely upon advertisements. Before you decide, ask us to send you free written information about our qualifications and our experience. Prior results do not guarantee asimilar outcome. Greenberg Traurig is a service mark and trade name of Greenberg Traurig, LLP and Greenberg Traurig, P.A. ©2009 Greenberg Traurig, LLP. Attorneys at Law. All rights reserved. Contact: Frank Ubell or Brad Blanche at 949.732.6500.**Operates as Greenberg Traurig Maher, LLP. *These numbers are subject to fluctuation. †Greenberg Traurig was selected by Chambers and Partners as USA Law Firm of the Year, 2007. ^According to CSC Trademark Insider, based on number ofUSPTO application submissions (2004, 2005, 2006, 2007 and first and second quarter of 2008) and IP Today, based on number of trademarks issued (2008). +IP Law 360’s 2007 annual survey, based on number of new cases taken. 8060

3161 Michelson Drive | Irvine, CA 92612Tel: 949.732.6500

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n often-heard complaint about the judicial system is that it permits the filingof baseless lawsuits in order to force a settlement due to the high cost of lit-igation. This problem affects large and small companies and individuals alikeand is particularly pronounced in cases litigated before the Federal Courtswhere liberal “notice” pleading requirements permit the filing of complaints

having only a minimal statement of a claim. As dismissal at the pleadings stage is dis-couraged and thus hard to obtain, a party facing a baseless lawsuit had to weather dis-covery, which can often cost more in attorney fees than the case is worth. While this hasbeen the subject of considerable discussion and proposed statutory reform for years,there has been little practical reform. However, in two recent decisions the SupremeCourt has taken significant steps to address the problem. In Bell Atlantic Corp. v.Twombly, 550 U.S. 544, 570 (2007), the Supreme Courtheld that a complaint must affirmatively plead facts thatestablish a right to recovery. This past May, in Ashcroftv. Iqbal, 129 S. Ct. 1937, 1953 (2009), the SupremeCourt made clear that the Twombly rule applied “in allcivil actions and proceedings in the United States districtcourts,” including patent infringement actions. TheTwombly and Ashcroft decisions ostensibly providelong-needed relief against the high cost of defendingagainst meritless claims by providing a mechanism for early and inexpensive resolutionof the case on the merits. Federal rules of civil procedure

Litigation in the Federal Courts is governed by the Federal Rules of Civil Procedure.The most often overlooked rule is Rule 1 which provides: “[These rules] should be con-strued and administered to secure the just, speedy, and inexpensive determination ofevery action and proceeding.” In spite of this lofty goal, the Federal Courts have con-strued and applied the Federal Rules in such a manner as to permit costly abuse of thejudicial process and forced settlements through the high cost of litigation as opposed tothe merits of a claim. One such example is Rule 8 of the Federal Rules of CivilProcedure that governs the allegations necessary to state a claim in the complaint. Rule8 requires that a complaint contain a “short and plain statement of the claim showing thatthe pleader is entitled to relief . . . ” The “short and plain statement” language has beenconstrued in the past as requiring only sufficient allegations to place the defendant onnotice of the claim. Referred to as “notice pleading,” this liberal pleading standard asapplied by the courts permitted entirely generalized pleadings which merely stated theconclusion that the defendant is liable under a given legal theory. In patent infringementactions, for example, all that was required was an identification of the patent and a gen-eral allegation that the defendant infringed at least one claim of the patent. Generalizedpleadings of this nature were incorporated into the complaint forms provided by theFederal Rules of Civil Procedure. See Form 18, FED. R. CIV. P. Such generalized plead-ings naturally opened the door to baseless actions as the plaintiff was not required tostate any facts that actually established any actionable wrong.Rule 12(b)(6)

The Federal Rules provide a mechanism for determining if a complaint properly statesa claim, though in practice it does not generally result in a dismissal of the case. Rule12(b)(6) of the Federal Rules of Civil Procedure permits the filing of a motion to dismissa complaint that does not “state a claim upon which relief can be granted.” However, witha notice pleading standard, courts facing such motions would merely require a morespecific pleading of the elements of the claim. As such, a Rule 12(b)(6) motion did nothold the promise of early resolution. Indeed, more likely than not, the plaintiff would begiven leave to amend and would simply amend by adding the missing element of theclaim without any further information showing that the defendant had actually committedan actionable act. Thus, in most instances, Rule 12(b)(6) motions were generally regard-ed as a waste of time and money. Some District Court Judges even openly discouragedthe filing of such motions. As a result, there was little practicable way to address theactual merits of a claim at the outset of litigation in order to avoid the wasted cost of dis-covery.Filing a motion for summary judgment

With no practical way to challenge a claim at the pleading stage, a defendant was leftonly with the option to file a motion for summary judgment. The Federal Rules permit thefiling of a motion for summary judgment when there are no material issues of fact in dis-pute and the moving party is entitled to judgment as a matter of law. However, mostFederal Judges are reluctant to grant or even consider a motion for summary judgmentprior to the completion of discovery. The Federal Rules even provide that a party facedwith a motion for summary judgment can oppose the motion on the grounds that addi-tional discovery is needed. Also an attempt to obtain summary judgment early in a caseis more often than not viewed by the court with suspension as an attempt to avoid lia-bility by obtaining a judgment prior to discovery. One could urge the court to limit dis-covery in the case to a specific dispositive issue. However, most courts are reluctant tolimit discovery as a practical matter because of the potential for overlap with other issuesor the practical difficulty of determining where to draw the line. The Supreme Court notedin Twombly the “common lament that the success of judicial supervision in checking dis-covery abuse has been on the modest side.” 550 U.S. at 544. Thus, without any practi-cal way to challenge a claim at the pleading stage, a defendant was most likely left withno practical choice but to endure costly and invasive discovery before it could have anyhope of dispensing with the case.

Noting that a plaintiff with a “largely groundless claim” should not be allowed to “ takeup the time of a number of other people, with the right to do so representing in terrorem

A increment of the settlement value,” the Supreme Court held in Twombly that Rule 8requires the complaint state sufficient facts to set forth a “plausible” claim for relief. 550U.S. at 557. Importantly, it is not enough to allege facts that might conceivably state aclaim or that are merely consistent with a potential claim. 550 U.S. at 556. The factsalleged must plausibly support the claim. For example, the complaint in Twombly allegeda conspiracy in restraint of trade in violation of the antitrust laws.

The only facts alleged to support the conspiracy allegations were that the defendantsengaged in “parallel conduct.” 550 U.S. at 556. The Supreme Court held, however, thatparallel conduct alone does not establish an illegal “agreement” in restraint of tradebecause there could be numerous explanations for the parallel conduct without an ille-gal agreement. 550 U.S. at 565. Thus, the complaint must state sufficient facts that sup-

port a plausible claim.As Twombly was an antitrust case, there were some

that argued that the “plausible” claim holding was limit-ed to antitrust cases or even more narrowly to antitrustconspiracy cases. However, last month the SupremeCourt made it clear in Ashcroft v. Iqbal that theTwombly rule applies “in all civil actions and proceed-ings in the United States district courts,” includingpatent infringement actions. 129 S. Ct. at 1953.

Importantly, the Supreme Court held that Rule 8 “does not unlock the doors of discoveryfor a plaintiff armed with nothing more than conclusions.” 129 S. Ct. at 1950. Thus, underAshcroft a court should not proceed with discovery until the plaintiff can allege facts suf-ficient to state a plausible claim. This does not impose an unreasonable burden on theplaintiff as Rule 11 of the Federal Rules of Civil Procedure mandates that counsel for theplaintiff conduct a pre-suit investigation in order to ensure that there is a proper factualand legal basis for filing the complaint. Thus, the requirement for a statement of facts suf-ficient to support a plausible claim requires nothing more than what should already be inthe possession of the plaintiff.

Whenever there is a significant decision by the Supreme Court, there is a backlash ofextreme holdings on both sides of the issue. It is likely, in spite of what appears to be theSupreme Courtʼs clear mandate to test the sufficiency of a complaint at an early stagethat some courts will adhere to the old rule discouraging motions to dismiss. However,the Supreme Courtʼs decisions in Twombly and Ashcroft offer new hope for companieswrongfully sued on threadbare claims in the hope that the high cost of litigation wouldforce a settlement that is not otherwise supported by the law or facts. A company facingsuch a complaint now can file a motion to dismiss for failure to state a claim that shouldbe more favorably viewed by the court. The court should ensure that the complaint statesfacts sufficient to state a plausible claim before permitting the case to proceed. As thereis no right to discovery absent setting forth such facts in the complaint, a company fac-ing a meritless action can potentially obtain an early dismissal of the case on the meritswithout the prohibitive cost of discovery.Conclusion

There remain difficult questions that still need to be addressed. For example, thereare cases where it may not be possible for the plaintiff to know all the facts necessary tosupport a claim prior to filing a complaint. One such example would be the non-publicuse of a patented process. It may not be possible to determine if the patented processis being used prior to the taking of some initial discovery. Another example in the antitrustcontext would be the ability of an antitrust victim to plead specific facts establishingantitrust injury. As the full extent of the antitrust defendants anti-competitive conduct maynot be known, some caution needs to be exercised before dismissing an antitrust casefor lack of antitrust injury. Indeed, pre-Twombly decisions have strongly cautionedagainst dismissal in such cases. In spite of the few difficult cases, the Supreme Courtʼsdecisions in Twombly and Ashcroft provide long needed relief against the high cost ofdefending against meritless claims by providing a mechanism for early and inexpensiveresolution of the case on the merits.

TThhee SSuupprreemmee CCoouurrtt’’ss DDeecciissiioonnss iinn TTwwoommbbllyy aanndd AAsshhccrrooffttProviding relief against the costly defense of meritless claims

JJaann PP.. WWeeiirrJan P. Weir is the chair of Stradling Yocca

Carlson & Rauth’s Intellectual Property practice.Mr. Weir specializes in high tech and complexintellectual property cases. His practice encom-passes the protection and enforcement of intel-lectual property rights and related business litigation in federal and statecourts. Mr. Weir has extensive experience in patent, trademark, copy-right, unfair competition, antitrust and other business tort litigation, inaddition to the preparation and prosecution of patent, trademark andcopyright applications. His ability to provide clients with creative andthorough legal solutions led to him being named one of the Top 30 IPLitigators in California by the Los Angeles Daily Journal.





ost businesses have trade secrets. It is the confidential and proprietary natureof trade secrets that gives a business certain advantages over its competition.This advantage arises because trade secrets are not known or used by com-petitors. Trade secrets are often the most valuable assets for any going busi-ness. Common examples include: (1) business and manufacturing processes,

(2) formulas, ingredients, methods and synchronization of activities, and (3) strategies andinformation about needs of customers and suppliers including pricing and time tables. Thesecret formula in Coca Cola is often cited as the quintessentialexample of a trade secret.

Broadly speaking, any confidential business informationunknown to others which provides an enterprise a competitiveedge may be considered a trade secret. The unauthorized use ordisclosure of such trade secrets is regarded in most jurisdictionsas an unfair business practice and an actionable violation of thattrade secret leading to the availability of damages and injunctiverelief.

Categories of trade secretsMost trade secrets fall into two broad categories: Technical Information and Business

Information. Technical Information may include the following:1. Plans, designs and patterns such as those for specialized equipment;2. Processes, methods, techniques and formulas such as those for the manufacture for

drugs, chemicals, and other materials; 3. Engineering and procedure notebooks and manuals;4. Negative information, information that certain designs did not work. For example, often

lengthy expensive research proves certain processes will not work. That knowledge is also valuable to a competitor;

5. Computer software (programs and source codes).Trade secret business information may include:1. Cost and pricing information for both the enterprise and its customers;2. Internal market analysis and forecasts;3. Customer lists;4. Current yet unannounced business relationships which are being negotiated;5. Merger and acquisition opportunities; 6. Marketing and advertising campaigns including timing and selection of media buys.

Means to protect trade secretsBusinesses are constantly faced with the challenge of protecting their trade secrets from

disclosure. Absent a concerted effort to protect against disclosure of a trade secret, theCourts will refuse to enforce its protected status. Any business wishing to protect its tradesecrets must only disclose the trade secrets on a need to know basis. The more employeeswith access to a companyʼs trade secrets, the greater the potential for the unauthorized dis-closure of company trade secrets. In fact, if a company discloses trade secrets to employeesthat do not need to know them, the trade secret protection may be lost even without disclo-sure to a person outside the company.

All employees, contractors, vendors and other personnel who are informed of the tradesecret should also be informed of its confidential status and when possible made to sign aconfidentiality agreement. In pursuing certain business opportunities, disclosures of sometrade secrets cannot be avoided. Thus, a license or a non-disclosure agreement should bepart of the process. This non-disclosure agreement should state the purpose for the disclo-sure and the exclusive permitted uses of the information, along with the obligation to main-tain the secrecy of the information.

Although a company cannot fully protect against unauthorized disclosure by once trustedemployees, the company can retain the rights to trade secret protection if it can demonstratethat it took reasonable steps to safeguard against disclosure. One such step is an employeehandbook or policy memorandum that the employee is required to sign acknowledging theduty to maintain the secrets inviolate. Many employee handbooks even require employees toreport to their supervisor or corporate counsel any suspected disclosure by others.

Protecting trade secrets in the age of the InternetToday with billions of bits of information passed over the Internet every second of every day,

even more vigilance is required to protect a businessʼ trade secrets. With todayʼs advancedtechnology, years of proprietary research can be downloaded from a computer system andonto a memory stick. That memory stick can then be placed into a briefcase or a shirt pock-et and carried off-site without anyone being the wiser.

There are many programs today that enable businesses to monitor activity at any givencomputer terminal. Depending on the value of the trade secret,such monitoring may be required in order to ensure that compa-ny trade secrets are not misappropriated and that companiescan make the required ancillary showing of appropriate effortand due diligence to protect them. By example, company firewalls must be maintained to prevent intrusions into companyhard drives by outside third parties. Further, employees whohave a need to know some trade secrets should not be allowedaccess to others. Company hard drives containing trade secretsmust be meticulously protected.

Through sophisticated passwords, computer systems can limit employee access to com-pany data, certain terminals and at different times of day. These protocols provide a muchheightened ability to protect trade secrets from disclosure to third parties as well as to unau-thorized employees within the company. We cannot over stress the need for these efforts.The reason most frequently cited by Courts to deny trade secret protection is the failure toappropriately treat the information as a secret.

Company websites may also contain graphics, source codes, object codes, algorithms, pro-grams or other technical descriptions utilized in its creation. If a website is custom built or cre-ated through proprietary software, it too can qualify as a trade secret. Protecting the sourcecode and all related data used in creating the website requires both a non-disclosure agree-ment and a declaration of ownership in favor of the company. The contract should specify thateverything created was a work made for hire. That way your non-disclosure agreement con-firms that the company, not the programmer, is the owner of the source code and the web-site.

The foregoing is not an exhaustive recitation of methods for protecting trade secrets. Youneed to consult with competent counsel when evaluating and enforcing a trade secret pro-tection program. The future of your business may depend on it.

Daniel J. Callahan is the managing partner of Santa Ana based Callahan & Blaine,Californiaʼs Premier Litigation Firm. For more information on Mr. Callahan and his firm, visitwww.callahan-law.com.


WHITELAW & TYLER LLPcontinued from page A-12a patent in reexam than at district court. In fact, more than half of all reexam proceedingsend with all claims invalidated or disclaimed. And if the patent survives reexam, it often doesso only because the patentee significantly amended the claims. When claims are changedduring reexam, an accused infringer may acquire “intervening rights” and escape infringe-ment liability.Second attempt at invalidating patent

Even if the district court does not stay the litigation, a concurrent reexamination providesan additional avenue for invalidating a patent. A determination of invalidity by the PTO willestop any future determination of validity by the district court, and it will even trump an ear-lier validity finding that has not been finalized through appeal. In addition, an accusedinfringer can argue certain grounds for invalidity at the district court – including obviousnessbased on prior art products, improper inventorship, or insufficient written description, noneof which can be raised during reexam – at the same time as pursing the other grounds forinvalidity in reexam.

Reexamination has many other potential benefits for an accused infringer. For example,a patentee might make statements during reexam that could be used against it in currentor future patent litigation, supporting prosecution history estoppel or inequitable conductallegations. In addition, reexam provides the opportunity to challenge the effective filingdate of claims added in continuing applications. Also, an accused infringer can point to thereexam to show that it is not willfully infringing any claims. Of course, there are drawbacks,including the potential preclusive effect of statements made by the accused infringer duringreexamination, and the potential expense of handling two separate proceedings. But, onbalance, reexam often provides a important weapon in patent litigation. The next time yourcompany is sued for patent infringement, you should contact an experienced patent litiga-tor to discuss this valuable tool.

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eeddggee mmaayy bbee ccoonnssiiddeerreedd aa ttrraaddee sseeccrreett.”

TTrraaddee SSeeccrreett PPrrootteeccttiioonn iinn tthhee AAggee ooff tthhee IInntteerrnneettby Daniel J. Callahan, Managing Partner, Callahan & Blaine

INTELLECTUAL PROPERTY LITIGATORS

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hat is a business method patent?Not more than a decade ago, purchasing travel tickets necessitated contacting

the airline either personally or telephonically to negotiate a transaction. If a triprequired hotel reservations and a car rental, it would have been more convenientto use a travel agent with exclusive access to certain travel databases. The travel

agent would then identify several options with varying costs, and com-municate the options to the customer. Todayʼs customer can bypassthe travel agent and make his own arrangements directly through theInternet. Not only do airlines and hotels have websites advertising theiravailability and rates, but their websites also provide a wealth of infor-mation on discounts and other services. Hence, the average customerfinds himself searching websites to find the best deals and seldom con-siders contacting the airlines or travel agents. In essence, the computer and its software allow thecustomer to be his own travel agent. Thus, it can be argued that the software which allows the com-puter to be used in this novel manner is patentable. One could take it a step further and argue thatthe steps involved in making the reservation online should also be patentable.

The subtlety of the new tool was not lost on clever businessmen and lawyers, and soon the U.S.Patent Office found itself mired in new business method applications seeking to chart this new fron-tier of technology.

Business method patents are a class of patents directed generally to a method of doing business.Business is defined broadly and may include e-commerce, banking, insurance and even activitymanagement.1 Business method patents can be distinguished from software patents in the man-ner in which the claim is drafted. Software claims are typically directed to a machine- readablemedium (e.g., hard drive, memory or disc) and/or instructions executed by a processor (e.g., com-puters). In contrast, business method claims seek to capture a method of performing a task (e.g.,steps taken to make a travel reservation).History of business method patents

One of the first cases that addressed viability of business method patents was State Street Bankv. Signature Financial Group.2 In this case, Signature Financial Group sought to enforce PatentNo. 5,193,056 against the State Street Bank. The patent at issue was directed to a data process-ing system having a hub-and-spoke configuration. The spokes were mutual funds that pool theirassets into a central hub. The defendant challenged the patent, arguing that it was not directed topatentable subject matter. The Court of Appeals for the Federal Circuit (“CAFC”) held that a busi-ness method application would be patentable if it had some practical application and if it produceda useful, concrete, and tangible result. This decision became the standard for subsequent patentlitigations concerning business method patents.

The State Street Bank holding was challenged and thwarted in the CAFCʼs decision captionedIn re Bilski,3 where the CAFC held that the “useful, concrete and tangible result inquiry” is insuffi-cient for determining patentability. Instead, the court emphasized the importance of the so-calledmachine-or-transformation test for determining patentability. Under this standard, patentable sub-

WBBuussiinneessss MMeetthhoodd PPaatteennttss aanndd YYoouurr BBuussiinneessss

by Dan Salehi, Snell & Wilmer L.L.P.

ject matter is one in which a specific machine (such as a computer) is directed under the guidanceof the novel computer instructions to do something new. In our travel reservation example, a com-puter programmed to make hotel reservations can be patentable if no such application was madeon the computer before.

Business method patents typically exclude a machine-or-transformation limitation. Thus, theBilski decision seems to suggest an end to business method patents.The Bilski decision has had wide implications for the business andpatent communities. For example, one may ask whether hundreds, ifnot thousands, of issued business method patents are now enforce-able. A corollary question is what is the future of the business methodapplications that are currently pending at the U.S. Patent Office?Should applicants consider withdrawing their applications, and if possi-

ble, seeking a refund from the U.S. Patent Office?On June 1, 2009, the United States Supreme Court agreed to review the case and decide the

ultimate fate of business method patents. In the mean time, the value of business method patentsremains in flux.Business method patents in foreign jurisdictions

Our international counterparts have diverging attitudes on business method patents. For exam-ple, Canada and the European Patent Convention do not consider applications which are directedto pure business methods or administrative tasks to be patentable. On the other hand, Japan con-siders business methods patentable if the invention requires a highly advanced creation of techni-cal ideas by which a law of nature may be applied.Practical implications

While it is difficult to render a definitive opinion on the value of business method patents until theSupreme Court has issued its ruling, some preliminary observations can be made. For example,patent owners are likely to hold off suing on a business method patent until a bright line rule isissued.

In the meantime, savvy businesses should audit their issued and pending patent applications todetermine what impact, if any, an adverse Supreme Court decision might have on their intangiblepatent assets. Applicants may continue filing business method applications with the proviso of tyingthe business method to a computer so as to satisfy the machine-or-transformation test should theSupreme Court uphold the CAFCʼs decision in Bilski. For applications that are currently pendingexamination, Applicants should consider whether the claims can be amended to satisfy themachine-or-transformation test should the Supreme Court upholds the CAFCʼs ruling. For businessmethod patents that have been issued in the last two years, Applicants should consider whetherthe claims should be modified through a Reissue procedure.

Similarly, defendants facing enforcement of a business method patent should review the patentcarefully to determine whether it conforms to any new requirements that the Supreme Court mayimpose. In the event that the Supreme Court upholds the machine-or-transformation test, defen-dants should determine whether the plaintiff has any other pending applications that can be amend-ed to conform to the new requirement or whether the claims of the issued patent could be con-formingly amended.

Should the Supreme Court overturn the Bilski decision and rule in favor of business methodpatents, a resurgence of patent litigation enforcing the business method patents is likely. To preparefor potential litigations, companies should consider negotiating their business insurance coverageto include patent litigation defense cost.

1See U.S. Patent Application No. 20080319769.2149 F.3d 1368 (Fed. Cir. 1998).3545 F.3d 934 (Fed. Cir. 2008).


DDaann SSaalleehhiiDan Salehi is IP Counsel in Snell & Wilmer’s Orange

County office, where he focuses on IntellectualProperty and Technology practice. His backgroundstems from many years of diverse experience, withheavy emphasis on patent prosecution and litigation.Salehi can be reached at (714)427-7404 or [email protected].

refused to issue a patent for what they considered to be an abstract idea. The Board of PatentAppeals and Interferences stated that Bilskiʼs application was not patentable because itaddressed an abstract idea without specifying tangible steps or technology for implementing theclaimed concept, nor did it provide a “physical transformation and a practical application of theabstract idea.” The case was appealed to the U.S. Court of Appeals for the Federal Circuit, whichreviews patent cases from the Appeal Board.

In a nine to three decision, the court upheld the ruling made by the Board of Patent Appealsthat denied the patent application and largely contradicted the State Street Bank case. Conclusion

The effect of the In re Bilski case is that it potentially hits some business industries particularlyhard, including the financial service industries, insurance industry and the software industries.Many patent experts believed that the case would probably never be reviewed by the SupremeCourt as it typically avoids involvement in patent cases, unless it sees reason for judicial review.Contrary to expert opinion, on June 1, 2009, the Supreme Court agreed to hear the case of In reBilski on appeal from the Federal Circuit.

So where does that leave us today? In light of the Supreme Courtʼs decision to hear the case,many patent experts anticipate that it will likely reverse the lower courtʼs decision or at least limitits effect and re-institute business method patents. These new business method patents will like-ly have stricter requirements and a clearer scope of what is protected under the patent.

RUTANcontinued from page A-16


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